Company proposes cutting second part of 2015 dividend to $500 million from $1 billion

RIO DE JANEIRO—Brazilian mining giant Vale SA proposed cutting dividends even more than planned Monday as it grapples with an “uncertain scenario” for commodity prices.

Vale’s management proposed reducing the second tranche of its 2015 dividend to $500 million, or about $0.10 per share as of Aug. 31. The board of directors is set to review the proposal at an Oct. 15 meeting, and payment would take place on Oct. 30.

If approved, the payment would come in at half the $1 billion that Vale doled out in the first tranche of 2015 dividends in April. The company said in January that it expected to pay $2 billion in dividends this year.

The downturn in prices for commodities like nickel and iron ore, of which Vale is the world’s largest producer, has since proved more lasting than mining companies had expected.

Other miners have also faced pressure to shore up cash reserves. Glencore PLC said earlier this month that it would scrap dividends altogether and raise up to $2.5 billion through a stock sale.

Fitch Ratings criticized Rio Tinto PLC and BHP Billiton PLC this month for a “commitment to always increasing, or at least maintaining dividends” outlays as negative for their credit profiles.